New Wires, New Competitors: Search for a Modern Regulatory Paradigm

Last week, Broadband for America reported on a Brookings Institution event titled, “Internet Everywhere: Broadband as a Catalyst for the Digital Economy.” Industry experts gave several recommendations on how communications policy can be reformed to reflect the decline of traditional copper-based networks and the rise of today’s broadband-based world. In a piece for BloombergBNA, Paul Barbagallo highlights another important recommendation made by the panel.

Carrier-of-last-resort (COLR) obligations are one of the most obvious regulations in need of reform, according to Hal Singer, an economist with Navigant Economics. These monopoly-era rules require telecommunications providers to serve customers in areas if no one else wants to. COLR obligations served a critical need when only telephone companies provided communications services, but, he argued, became antiquated in the face of new Internet-based telephone service from cable companies. Singer used the example of deals negotiated between cable operators and real estate developers to be the exclusive provider of voice, video, and internet services for new subdivisions. Under state and federal regulations, however, if a cable operator decides to stop serving a particular subdivision, the legal COLR obligation to serve that subdivision would still fall squarely on the incumbent phone company. Furthermore, incumbent providers are required to maintain their copper-based networks, regardless of whether or not they are upgrading to fiber, which Singer believes skews the market.

To address these regulatory burdens, Broadband for America member AT&T filed a petition with the Federal Communications Commission (FCC) to launch a proceeding to “facilitate the transition” from legacy copper networks to all IP networks. AT&T explained the petition is an opportunity for the FCC to better understand the “technological and policy dimensions” of the transition and identify any “regulatory reforms needed to promote consumer interests and preserve private incentives to upgrade America's infrastructure.”

“We have to be able to start this transition from the old to the new, and have the FCC in a position facilitating that, not slowing it down,” AT&T Senior Executive Vice President Jim Cicconi explained. “The underlying statutes were designed for a Bell monopoly telephone system that doesn't exist anymore.”